Overall 2016 was a great year for dividends and I’m hoping 2017 will be even better. December brought another solid month of income and with some new cash being put into the investment accounts thanks to the 2017 TFSA amounts, it looks like the first few months of 2017 will be even higher.
Much like the past few months, December was another month of slow and steady growth. I didn’t do much as far as investing goes but that will likely change in the next couple weeks. Maybe if an opportunity comes up I’ll finally invest in a couple companies I have been watching for a while – CCL, Telus and Intact Financial Corp.
The Dow is still near 20,000 which is an all-time high – not exactly the best time to be entering the market. But the thing I always try to remind myself is that with a timeline of over 20 years, the short term fluctuations in the market really don’t matter much.
I’m happy to report that a couple stocks I own recently announced dividend increases:
- Canadian Utilities (CU) – recently announced a 10% dividend increase
- ATCO Ltd. (ACO.X) – recently announced a 15% dividend increase
- Enbridge (ENB) – recently announced a 10% dividend increase
I love dividend increases for the obvious reason that it means more money. But it also sends a signal to the market that the company is committed to growing their total shareholder returns. So long as the dividend increases are sustainable I am all for it.
This likely won’t be news to any other dividend investors out there but dividend increases can add up fast; if Enbridge continues their plan to increase their annual dividend by 10% through to 2024, by that time it will be paying over $4.50 per share – and yield (based on my cost) over 8%. Even if the increases are lower, it will still result in a higher yield and growing cash flows for shareholders.
Stocks I am Watching
CSX – CSX is a transportation company based in Florida with a rail business focusing mainly on merchandise and coal. The main reason why I’ve started watching CSX is because they are rumored to be in talks with Hunter Harrison, the current CEO of CP Rail. Harrison is considered one of the smartest people in the rail business and has turned both CN Rail and CP Rail into stars, lowering their operating ratios (used to measure efficiency) to record levels. If he joins CSX he would likely do the same for their business. The market seems to agree, since CSX jumped 23% on the day it was announced Harrison was leaving CP.
CSX wouldn’t normally be something I’d be interested in based on their previous performance, but of course I’d be buying on future performance expectations.
What are your thoughts on CSX?
Aside from reinvesting the dividends, December was a slow month for activity. I did convert some cash into US dollars, so that I can be ready to buy in case an opportunity comes up soon.
I haven’t used the extra cash for the TFSA accounts yet but plan to do so shortly. Investing this cash likely means the dividend income will continue to grow in the future. I’m just not sure where to invest it and whether right now is a good time to invest. I could wait, but I don’t want to be on the sidelines for much longer or hold more cash than I have to. I try to have about 15% cash available in case a buying opportunity comes up, and anything higher than that is too much for me.
December Dividend Income
I received dividend income from the following sources:
- RioCan REIT
- Crescent Point Energy
- Surge Energy
- ETF: iShares Canadian Dividend Aristocrats (CDZ)
- ETF: iShares Select Dividend Index Fund (XDV)
- Cineplex Inc.
- Canoe EIT Income Fund
- Canadian Apartment REIT
- Canadian REIT
- Allied Properties REIT
- ATCO Ltd.
- Canadian Utilities
- Johnson & Johnson
Total dividend income: $1,157.61
Note – some of the dividends received each month are in US currency which is converted at 1:1 for simplicity.
Conclusion: 2016 was a great year for dividend income. The new TFSA cash for 2017 should help increase the monthly income going forward and I’m waiting for more buying opportunities to come up.
How was your investment income last month? What are you watching/buying?